The Supreme Court today refused to hear the appeal of a former Community Savings and Loan officer who was denied permission to spend $500,000 she got from federal fugitive Tom J. Billman.

The high court, without comment, refused to hear the case of Barbara A. McKinney, who claimed that court-ordered pretrial restraint on her use of the money deprived her of the right to hire defense counsel of her choice.

McKinney, Community's former vice president and Billman's former mistress, is a co-defendant with Billman, another former Community official and Billman's holding company in a criminal fraud case tied to the Bethesda thrift's 1985 collapse. That case is scheduled for trial this fall in U.S. District Court in Baltimore.

Billman allegedly fled the country with $22 million in Community shareholders' money several years ago. He currently is the subject of an international search and a $200,000 reward that grew out of an arrest warrant issued in federal court in Baltimore.

Prosecutors had sought to block McKinney from spending the $500,000, which she allegedly got from Billman's lawyer in London, on grounds that the money could be forfeited as illicit proceeds of Billman's alleged fraud if the government wins the criminal case.

The key issue in McKinney's appeal was the scope of pretrial restraint and forfeiture provisions in the federal Racketeering Influenced Corrupt Organizations Act (RICO) law.

U.S. District Judge Walter E. Black Jr. originally ruled in Baltimore that McKinney should be allowed access to the money unless the government could prove that the transferred assets were the proceeds of a RICO offense.

But the 4th U.S. Circuit Court of Appeals, in Richmond, Va., unanimously reversed Black's decision, which led to McKinney's Supreme Court appeal.

Even if the $500,000 could not be deemed proceeds of a RICO offense, the anti-racketeering law could bar McKinney's use of the money, the 4th Circuit said in an opinion last October.

Assistant U.S. Attorneys Barbara S. Sale and Joyce K. McDonald said today they were pleased with the Supreme Court's action.

The high court let stand what Sale called "a significant development of the law beyond this case."

McKinney's defense counsel of choice, Washington attorney Abbe S. Lowell, had told Black at hearings in Baltimore that he could not continue to represent her if she did not get access to the Billman money, because she could not otherwise afford his ** fee.

Lowell said today he had no comment on the Supreme Court denial.

McKinney now is represented by two assistant federal public defenders.